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Monday November 19, 2018

Finances

Adobe Tops Wall Street's Estimates

Adobe Systems Incorporated (ADBE) released its quarterly earnings report on Thursday, September 13. The software company's revenue and profit surpassed Wall
Street's expectations for the quarter.

Adobe reported quarterly revenue of $2.29 billion. This is up 24.4% from last year's third quarter revenue of $1.84 billion and was above the $2.25 billion
that Wall Street predicted.

"Adobe continues to inspire creativity and drive business transformation as reflected in our record Q3 results," said Adobe President and CEO Shantanu
Narayen. "Students, creatives, enterprises and governments trust Creative Cloud, Document Cloud and Experience Cloud to create and deliver the
transformative digital experiences required to compete today."

The company announced quarterly profit of $666.29 million, up from earnings of $419.57 million one year ago. Adobe reported adjusted quarterly earnings of
$1.73 per share, topping the $1.69 per share that analysts predicted.

Adobe continues to profit from its move away from packaged software to its cloud-based subscription model. The software company's main source of revenue
comes from its creative and digital media segment, which includes Adobe's Photoshop and Illustrator software. In the third quarter, this segment brought in
$1.61 billion in revenue, which is up 22% year-over-year.

Adobe Systems Incorporated (ADBE) shares ended the week at $274.69, up 3.9% for the week.

Kroger Reports Mixed Results

The Kroger Co. (KR) reported quarterly earnings on Thursday, September 13. The supermarket chain exceeded earnings expectations, but fell short of revenue
projections causing shares to fall 10% after the report's release.

Kroger announced revenue of $27.87 billion for the second quarter. This is up from revenue of $27.60 billion reported in the same quarter last year but was
below the $27.95 billion in revenue that Wall Street expected.

"We are only two quarters into our three year Restock Kroger plan, and we are making solid progress," said Kroger Chairman and CEO Rodney McMullen. "Kroger
customers have more ways than ever to engage with us seamlessly through our recently-launched Kroger Ship, expanded availability of Instacart, successful
ClickList offering, and selling Simple Truth in China through Alibaba's Tmall."

The company reported net earnings of $508 million, up from $353 million reported one year ago. On an adjusted earnings per share basis, the company reported
profit of $0.41 per share, surpassing the $0.38 per share that analysts predicted.

Kroger, the owner of grocery stores Fred Meyer, Ralphs and Roundy's, saw its same-store sales rise 1.6% in the quarter, but fell short of the 1.9% increase
analysts expected. The company pointed to recent store layout changes as one factor that contributed to its lower-than-expected same-store sales. Kroger
hopes to boost its earnings in the upcoming months by focusing on bolstering its ecommerce platform and online delivery capabilities.

The Kroger Co. (KR) shares ended the week at $27.79, down 13.5% for the week.

Sonos' Shares Tumble on Earnings Loss

Sonos, Inc. (SONO) announced quarterly earnings on Monday, September 10. The wireless speaker manufacturer's shares dropped more than 20% following the
report's release, marking the company's worst trading day since it went public in August.

Revenue for the third quarter reached $208.4 million. This is down from revenue of $223.1 million reported during the same quarter last year and is slightly
higher than the $208.0 million in revenue that analysts expected.

"Our Q3 FY2018 performance was at the high end of the preliminary ranges we provided in the Recent Developments section of our final prospectus filed in
connection with the IPO," said Sonos CEO Patrick Spence in a letter to shareholders. "Despite the double-digit percentage increase in products sold, revenue
declined 6.6% compared to Q3 of FY2017. This dynamic between year-over-year product unit growth and year-over-year revenue decline can be caused by our new
product launches and/or product mix."

Sonos reported a net earnings loss of $26.99 million, which is larger than last year's third quarter earnings loss of $14.34 million. On an adjusted
earnings per share basis, the company posted a loss of $0.45 per share, compared to a loss of $0.26 per share reported one year ago.

The Santa Barbara, California-based company saw its shares rise 13% on Monday in anticipation of its first earnings report as a public company only to fall
more than 20% the next day following news of the company's earnings loss. Sonos, best known for its wireless home-audio equipment, experienced a 1% revenue
boost in its wireless speakers category, while its home theater speakers revenue dropped 20% in the third quarter. Despite falling short of earnings
expectations, the company remains hopeful that it will meet its $1.1 billion revenue projection for the year.

Sonos, Inc. (SONO) shares ended the week at $16.65, down 14.18% for the week.

The Dow started the week of 9/10 at 25,037 and closed at 26,155 on 9/14. The S&P 500 started the week at 2,881 and closed at 2,905. The NASDAQ started
the week at 7,940 and closed at 8,010.

Treasury Yields Edge Higher

After falling on Thursday with the release of recent consumer pricing data, yields on U.S. Treasury bonds reversed course and edged higher on Friday
morning. The uptick was a reaction to the release of updated consumer data and forecasts for future interest rate hikes.

On Friday, the Commerce Department announced that retail sales increased 0.1% in August. The Commerce Department also revised July's retail sales figures
and announced that retail sales in July rose 0.7%, which was higher than the 0.5% previously reported. The news pushed yields upward, causing the yield on
the 10-year Treasury note to rise above 3% for the first time since August 2.

"Although August was a little weaker, if you look at the back month revisions, it more than made up for that," said Jacob Oubina, senior economist at RBC
Capital Markets. "So the Street is going to be taking up their third-quarter GDP estimates on the back of this."

Also contributing to the uptick in Treasury yields on Friday was increased confidence that the Federal Reserve will raise interest rates two more times
before the year's end. On Friday, CME Group's FedWatch Tool indicated that expectations for a September rate hike are at 95% while expectations for a
December rate hike are at 78.4%, up from 77.2% one week ago.

Yields were lower on Thursday following the release of weaker-than-expected inflation data. On Thursday, the Labor Department reported that the Consumer
Price Index, which tracks prices of a wide variety of products purchased by consumers, rose 0.2% in August. This was less than the 0.3% that economists
predicted, causing the yield on the 10-year Treasury note to fall from 2.98% to 2.95%.

"CPI was much weaker than expected," said Stan Shipley, strategist at Evercore ISI. "The headline was less of a surprise than the core reading. But when you
look at the pieces, there's less to that story as it was in healthcare and in clothing prices primarily. Both of those should rebound in the months ahead."

The 10-year Treasury note yield closed at 2.99% on 9/14, while the 30-year Treasury bond yield was 3.13%.

Mortgage Rates Rise

Freddie Mac released its latest Primary Mortgage Market Survey (PMMS) on Thursday, September 13. The report revealed that mortgage rates rose for the third
consecutive week.

The 30-year fixed rate mortgage averaged 4.60% this week, up from 4.54% last week. During this time last year, the 30-year fixed rate mortgage averaged
3.78%.

This week, the 15-year fixed rate mortgage averaged 4.06%, up from last week when it averaged 3.99%. Last year at this time, the 15-year fixed rate mortgage
averaged 3.08%.

"Mortgage rates are currently 0.82% higher than a year ago, which is the biggest year-over-year increase since May 2014," said Sam Khater, Chief Economist
at Freddie Mac. "Looking ahead, annualized comparisons for mortgage applications may look weaker than they appear, but that's primarily because of the large
spread between mortgage rates now and last September, which was when they reached their low for the year."

Based on published national averages, the money market account closed at 1.24% on 9/14. The 1-year CD finished at 2.54%.